Gujarat High Court
Shah Foils Limited vs Union Of India on 3 October, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4857 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
No
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SHAH FOILS LIMITED
Versus
UNION OF INDIA & ORS.
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Appearance:
MR ANAND NAINAWATI(5970) for the Petitioner(s) No. 1
ADVOCATE NOTICE UNSERVED for the Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 2
PARAM V SHAH(9473) for the Respondent(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 03/10/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Anand Nainawati for the petitioner and learned advocate Mr.Param V. Shah for the respondent No.3.
2. Rule, returnable forthwith. Learned Page 1 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined advocate Mr.Param Shah waives service of notice of rule for and on behalf of the respondent No.3.
3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs :
"(a) Issue an appropriate writ, declaring Rule 10 of the Place of Provision of Service Rules, 2012 and Rule 2(1)(d)(EEC) of the Service Tax Rules, 1994 to be unconstitutional and ultra vires the provisions of the 1994 Act;
(b) Issue an appropriate writ, striking down Section 66B of the Finance Act, 1994 read with Rule 10 of the Provision of Service Rules, 2012 in so far as it imposes the levy of service tax on the services by way of transportation of goods by a vessel from a place outside Page 2 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined India up to the customs station of clearance in India, where the service provider and the service recipient is located outside India;
(c) Issue an appropriate writ, declaring Rule 8B of the Point of Taxation Rules, 1994 to be unconstitutional and ultra vires the 1994 Act;
(d) Issue a writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, order or direction, under Article 226 of the Constitution of India declaring paras 4 & 4.1 of the TRU Circular No.206/4/2017-ST dated 13.04.2017 to be contrary to law;
(e) Issue a writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, order or direction, under Article 226 of the Constitution of India, restraining to the Respondents from levying service tax on the services by way of transportation of goods by a vessel from a place outside India up to Page 3 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined the customs station of clearance in India;
(f) Issue any other writ, order or direction as this Hon'ble Court may deem just and fair and circumstances of the case;
(g) For such further and other reliefs as the nature and circumstances of the case may require."
4.1. The brief facts of the case are that the petitioner was subjected to pay service tax for the services availed on ocean freight as per the Notification No.15/2017. 4.2. This Court by judgment and order dated 23rd January, 2020 in case of Mohit Minerals Pvt. Ltd. Versus Union of India and Others (Special Civil Application No.726 of 2018) held the Notification No.8/2017-Integrated Tax Page 4 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined (Rate) dated 28.06.2017 and the Entry No.10 of the Notification No.10/2017-Integrated Tax of the same date as ultra vires the provisions of the Integrated Goods and Services Tax Act, 2017 (for short 'the IGST Act') on the ground that both the Notification and the Entry lack legislative competency. The decision of this Court is also upheld by the Hon'ble Supreme Court.
4.3. In the case of M/s.Sal Steel Ltd. & Anr. Versus Union of India & Ors. reported in 2019 SCC Online Guj 3706, this Court passed the following order :
"58. In view of the aforesaid discussion, the writ application succeeds and is hereby allowed. The Notification Nos.15/2017-ST and 16/2017- ST making Rule 2(1)(d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse Page 5 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined charge Notification No.30/2012-ST is struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994; and consequently the proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed and set aside with all consequential reliefs and benefits."
4.4. In the decision in case of Torrent Power Ltd. Versus Union of India & Anr. (Special Civil Application No.2748 of 2022) rendered on 25th April, 2022 following the decision in case of M/s.Sal Steel Ltd (Supra), this Court has held as under :
"4. The petitioner, therefore, applied for refund on the basis of the order passed by this Court before the respondent - authority. However, the respondent - authority by order dated Page 6 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined 03.01.2022 rejected the claim of the petitioner by observing as under
"29. As the service tax have been declared unconstitutional and the refund have been claimed under section 83 of Finance Act, 1994, the issue is whether the Central Excise Office has power to sanction the refund of the taxed which have been declared as unconstitutional. In this connection I find that Supreme court in case of Mafatlal Industries Ltd.
vs. Union of India -
1997(89)ELT247(SC) has pronounced
that such refunds are out of the
preview of Section 11B of the Central Excise Act, 1944 and only way to get the refund of such amount is to file Writ Petition or Civil Suit and the said Judgment have been relied upon by the CESTAT in many cases. In one such case, CESTAT Mumbai in the case of Casa Grande Co-Operative Housing Vs. Commissioner of CGST (CESTAT Mumbai) in Appeal No.ST/86347/2018 Page 7 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined has held that when any provision in the statute has been held to be unconstitutional, refund of tax under such statute will be outside the scope and purview of such enactment and under such circumstances, refund can be claimed by way of a suit or by way of writ petition."
5. The judgment delivered by this Court is binding upon the sub-ordinate authority, more particularly, when the same is not stayed by the higher authority inspite of the fact that the judgment of this Court is pending before the Apex Court for adjudication.
6. In view of the above reasons, this petition is allowed. The respondents are directed to pay service tax already paid by the pursuant to the Notification 15/2017, which is declared ultra vires as observed in case of Sai Steel Ltd. (supra). The respondent to refund the service tax at the earliest and not later 12 weeks from the date of Page 8 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined receipt of this order along with interest as per the law. Rule is made absolute. No order as to costs." 4.5. By following the aforesaid decision, in Special Civil Application Nos.17804 of 2017 and 11626 of 2018 in case of Kandla Port Steamship Agents Association Versus Union of India & Ors., this Court on 12.06.2024 directed the respondents to refund the service tax already paid by the petitioner pursuant to the Notification No.15/2017 which was held to be ultra vires in case of M/s.Sal Steel Ltd (Supra).
5. Learned advocate Mr.Anand Nainawati for the petitioner and learned advocate Mr.Param Shah for the respondent jointly submitted that the facts of the case are identical with that of the M/s.Sal Steel Ltd (Supra) and Kandla Port Steamship Agents Association (Supra) and Page 9 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined in view of the decision of this Court striking down the Notification No.15/2017 for levy of the service tax on the services by way of transportation of good by a vessel from a place outside India up to the customs station of clearance in India, where the service provider and the service recipient located outside India was held to be ultra vires and therefore it was submitted that the petition may be allowed by directing the respondents to refund the amount of service tax already paid by the petitioner pursuant to the Notification No.15/2017.
6. Considering such submissions and in view of the decisions extracted hereinabove, the petition is allowed and the respondents are directed to refund the service tax, if any, already paid by the petitioner pursuant to the Notification No.15/2017 after verification of Page 10 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025 NEUTRAL CITATION C/SCA/4857/2019 JUDGMENT DATED: 03/10/2025 undefined the details which may be submitted by the petitioner. Rule is made absolute to the aforesaid extent. No orders as to cost.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) PALAK Page 11 of 11 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 08 2025 Downloaded on : Wed Oct 08 22:33:18 IST 2025